In their hunt for an elixir of immortality, Taoist alchemists discovered gunpowder, sparking an era of warfare defined by the use of firearms. Centuries later, the steam sloopNemesis, with her twin 32-pounders, would destroy Chinese war junks in the first opium war, forcing China to cede control of Hong Kong to the British. Innovation that gave China early strategic advantage spread widely, was improved and established an inequality in military power, leaving China on the weaker side of that divide.

A perception of vulnerability has led China’s leaders to adopt an enthusiastic and nationalistic approach to technological development. Since Mao’s ‘two bombs and one satellite’ project, China’s technocrats have anticipated that a focus on innovation will produce breakthroughs that underwrite China’s rise and, importantly, mitigate attempts by others to abort their ascent. Last month Premier Li Keqiang in an address to the Summer Davos Forum stressed, ‘massive entrepreneurship and innovation by all will generate enormous power’—the ‘golden key’ for China. In August, President Xi Jinping made a similar statement, saying that ‘China must take the opportunity to lead a new wave of global technological competition.’

Nationalism in China’s technological development picked up pace after the introduction of two key policies: the medium- and long-term program for science and technology development in 2006, and the ‘strategic emerging industries’ initiative in 2010. Hu Jintao was the paragon of tech innovation, and his ‘scientific development concept’ set the tone for today’s obsession. In areas such as renewable energy, China has focused on what Andrew Kennedy at the ANU calls ‘pragmatic techno-nationalism’ (PDF), with policies designed to favour domestic firms while retaining close collaboration with international partners. That approach balances necessary reliance on foreign technology and investment with China’s desire to have its own breakthrough moments.

In the high-tech sector, there’s been growing suspicion about China’s willingness to comply with the norms of the international market-based economy. China has been accused of discriminatory policies and ‘pulling the rug’ from under foreign companies in an attempt to bolster the fortunes of indigenous industry. Adding to those concerns are predatory trade practices and alleged IP theft via cyberattacks. A recent US Chamber of Commerce report (PDF) on China’s anti-monopoly law found that ‘China appears promoting industrial policy goals and boosting national champions, even at the expense of competition’—in violation of WTO antitrust law.

True, most states have their own history of discriminatory industrial policies, and China is understandably sceptical about foreign high-tech products that could undermine its national security. (The Central Military Commission has recently issued guidelines for the PLA to develop indigenous information security.) But immediate trade and diplomatic disputes mask a deeper dilemma for long-term strategic stability: the competition for innovation will determine the relationship of great powers into the future, particularly as the gap between innovative capability diminishes, and competition turns from ‘catch up’, to ‘take the lead’.

Some of the future’s unknown innovations will be transformational, and there’s no better retrospective case than the internet, which not only spawned new sectors that support economic dynamism, military power and political primacy, but remade whole societies and amplified differences between them. Innovation is disruptive, and often destructive, and great powers invariably see their relative strategic advantage as a function of innovative strength. The expectation that others are innovating will push nations to do the same, producing a development-security race.

The invisible hand in China’s techno-nationalist desire is a fear that without innovation, it’ll sit stagnant in the ranks of the international order, its once immutable rise will look increasingly shaky, and its vision of great power prestige will be lost. All the while there’s a concern that China will never be ‘innovative’, not least because of the contradiction between a risk-averse party-state chasing disruptive innovation.

There are limits to a top-down techno-nationalist policy and China is currently supporting flexible arrangements that promote collaboration. In Asia, high-tech partnerships have encouraged a system of technological strength, creating more competition outside of established centres of innovation. In July, Xi Jinping led a group of business leaders to South Korea, and in September, he wrote an op-ed in The Hindu, calling for closer ties with India’s IT industry.

Over the long term, as reliance on foreign expertise becomes less acute, a genuine capability to innovate develops, and competition over the knowledge economy intensifies, Chinese leaders are likely to continue their pragmatic approach. If today’s challenge is to build indigenous innovation champions that can solve China’s development challenges and overcome perceived weaknesses, tomorrow’s challenge will be to showcase those champions abroad for relative gains in power and prestige.

There’s been recent cause to celebrate China’s innovate-or-perish vision. E-commerce company Alibaba listed on the New York stock exchange for the highest valued initial public offering in history—with a market cap to match Scotland’s GDP. ‘Internet companies are leveraging technology to transform China into a innovation great power’ declared one China Youth Daily article. Is this the first spark in China’s next gunpowder moment? No, but it’s the clearest sign yet that continuity in China’s technological development strategy is paying off.